By Tiffany Williams –
Connecticut received notification from two credit rating agencies that they are raising Connecticut’s general obligation bond outlook from “stable” to “positive.”
In a notice to investors that was released Thursday, Fitch Ratings, a leading provider of credit ratings, commentary and research for global capital markets said, .“The Outlook revision to Positive reflects Fitch’s view that Connecticut is likely to see medium-term revenue growth at or slightly above Fitch’s long-term expectations for national inflation, while the state maintains its renewed commitment to budgetary guardrails that constrain expenditure growth.”
Fitch also said, “Connecticut’s robust fiscal resilience is bolstered by statutory mechanisms supporting accumulation of reserves including setting aside in the budget reserve fund (BRF) volatile revenue collections over specific thresholds and a required excess margin of revenues over budgeted spending. Budget management powers and sophisticated fiscal monitoring, including frequent revenue and budget forecasting, allow the state to quickly identify budget underperformance and address emerging gaps.”
Moody’s said, “The outlook revision to positive is driven by the state’s prudent financial policies that have led to increased budgetary reserves and consistent pension contributions that have begun moderating the state’s very high unfunded pension liabilities. With continued adherence to these policies, the state is expected to maintain solid reserve levels and further reduce leverage metrics.”
Since 2021, all four of the major credit rating agencies have upgrades Connecticut’s general obligation bond ratings.
“Once again, investors are taking note of the significant progress Connecticut continues to make to grow our economy and reduce our fixed cost growth,” Governor Lamont said. “Connecticut residents and businesses directly benefit from this improved outlook in the form of lowered borrowing costs. Over the past six years, we have made approximately $8 billion in additional pension payments and rebuilt our rainy-day fund, providing about $700 million savings in the general fund, while also reducing the legacy burden on our children and grandchildren.”